Trade and Industry Minister Rob Davies. Photo: Simphiwe Mbokazi.

Cape Town - Blacklisted consumers who have paid off their debts would have their adverse credit information removed by the end of May, Trade and Industry Minister Rob Davies said yesterday.

This one-off measure kicks in on April 1 – from that date credit bureaus will no longer be allowed to even display adverse details. It was announced hours before the National Credit Amendment Bill was passed in the National Assembly.

The draft law increases consumer protection on a number of fronts:

l Consumers will no longer have to embark on a separate, often costly, process to have their blacklisting removed from credit bureau databases as this would be done automatically after proof of settlement is obtained.

l More robust affordability tests to prevent reckless lending.

l Strict registration requirements for all credit providers.

l Tighter measures relating to debt councillors.

In addition, people under debt review, who had a proven record of repayment, would have their mortgage premiums removed from the debt review – otherwise they would remain under debt review until the mortgage was paid up, usually over 20 years.

Davies said the regulations for the once-off removal of adverse credit details would sync with the provisions of the amendment legislation expected to be enacted by mid-year.

“We need to clear the slate,” he said. “Pay your debt! Clear your financial health!”

Around half of South Africa’s 21 million credit-active citizens have impaired credit histories.

This was “a serious problem” with wider repercussions, said Davies, as credit providers checked before approving a home loan and so did prospective employers.

An unemployed father of 54 with four sons this week wrote to the Department of Trade and Industry to outline this catch-22: “Bottom line is, I… need to earn money in order to achieve and maintain a positive credit record, but if I am refused any work, how on earth can I repay my debt?”

Trade and industry deputy director-general Zodwa Ntuli appealed to consumers to check their status with credit bureaus, even if the responsibility for removing adverse credit information fell squarely on credit bureaus, which must account to the National Credit Regulator.

Also planned is an awareness and information campaign on the measure for consumers whose debt is paid off. - Cape Argus